Video SRQ: Is It Worth it to Pay a 7% Credit Card Fee to Earn Capital One Rewards Points?

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our Advertising Policy, visit this page.

TPG reader Katie is doing some home improvements and wants to use her Capital One Venture Rewards card to pay for them, but that might not be the best idea:

“We have to have $2,900 worth of work done on the house. Our handyman accepts credit cards, but he’ll have to charge a 7% sales tax. Would the points earned on a Capital One Venture Rewards card be worth the extra $200 it would cost us to put this purchase on the card? I’m not sure how to figure that out.”

Of course I try to put any and every expense possible on my credit cards in order to earn points, so I’m glad to hear you’re thinking that way as well. In this type of situation, however, it is absolutely not worth paying an extra 7% just to use your Capital One Venture Rewards card.

Capital One miles are valued at about 1 cent per point when you go to redeem them, so if you were to pay this charge, you’d basically be paying 7 cents to get one cent back. Personally, I wouldn’t pay 7 cents for any point – it’s sort of like spending 7 cents to buy a penny.

Putting extra spend on a Delta Reserve card is worth it because you’ll earn elite miles.

Some vendors only charge 2 or 3% for using a credit card and when paying your taxes it will cost you 1.89-3% depending , which I have done before. I justified paying the extra fee because not only can the value of a point be more than 2 cents, but the benefits you get from the points can be worth much more than that. For example, with the Delta Reserve card you’ll earn 15,000 MQM’s for spending $30,000 in a calendar year, which will help you maintain your elite status. Also companion passes like the British Airways Travel Together ticket, which you earn after spending $30,000 in a calendar year on your British Airways Visa, can be worth thousands of dollars depending on how you use and value them.

Earn the British Airways Travel Together ticket by spending $30,000 per calendar year on your British Airways Visa.

In general, I try not to pay more than 2 cents per point, especially when I can get them through lucrative credit card sign up offers. I recently did an app-o-rama in March and signed up for 5 new credit cards that earned me 315,000 points once I hit the spend thresholds on each card. Being able to go about my spending as normal and earn hundreds of thousands of points is a much better option to me than paying extra for them in a situation like this.

As always, it really depends on your personal situation – do you pay full price for first class and will using miles actually save you that much money? There’s no one right way to value your miles, but you should always evaluate how much you’re going to pay to get those points or miles and what value you’ll get for them in the end. If you’re not going to redeem them for more than what you paid, it’s not worth it and you should pay with cash even though it pains me to tell you that.

Since I’m frequently asked how much certain points and miles are worth, here are my personal valuations of different currencies:

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Advertising Disclosure

The credit card offers that appear on the website are from credit card companies from which ThePointsGuy.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all credit card companies or all available credit card offers. Please view our advertising policy page for more information.

Editorial Note: Opinions expressed here are author's alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.